Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/141832
Authors: 
Brueckner, Jan K.
Fu, Shihe
Gu, Yizhen
Zhang, Junfu
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5855
Abstract: 
This paper develops a new approach for measuring the stringency of a major form of land-use regulation, building-height restrictions, and it applies the method to an extraordinary dataset of land-lease transactions from China. Our theory shows that the elasticity of land price with respect to the oor-area ratio (FAR), an indicator of the allowed building height for the parcel, is a measure of the regulation’s stringency (the extent to which FAR is kept below the free-market level). Using a national sample, estimation that allows this elasticity to be city-specific shows substantial variation in the stringency of FAR regulation across Chinese cities, and additional evidence suggests that stringency depends on certain city characteristics in a predictable fashion. Single-city estimation for the large Beijing subsample, where site characteristics can be added to the regression, indicates that the stringency of FAR regulation varies with certain site characteristics, again in a predictable way (being high near the Tiananmen historical sites). Further results using a different dataset show that FAR limits in Beijing are adjusted in reponse to demand forces created by new subway stops.
Subjects: 
floor-area ratio
density restriction
urban development
China
JEL: 
R14
R52
Document Type: 
Working Paper

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